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If You Can’t Beat ‘Em, Join ‘Em: U.S. Seeks Collaboration With China-Led Infrastructure Bank

U.S. China ChessThe Obama administration, much to its embarrassment, in recent weeks has been spurned by its Western allies that have flocked to the $50 billion Chinese-led Asian Infrastructure Investment Bank (AIIB) — a potential rival to the Western-led IMF and World Bank — despite pleas from the White House to stand back amid concerns that Beijing will extend its influence in the region.

In a surprise move last week, the UK applied to become the first Western nation and G7 member to join the AIIB.  The move was followed on Tuesday as G7 members Germany, France, and Italy announced that they too would also apply to join the bank.  On Friday, Switzerland and Luxembourg submitted their applications for membership.

Australia, a key U.S. ally in the Asia-Pacific region which also had come under pressure from Washington to stay out of the new bank, is expected to apply for membership at the AIIB.  Hong Kong, South Korea, and Taiwan are also weighing to apply for membership at the bank. Whereas Japan, alongside the U.S., have remained skeptical about the negotiation.

As of March 22, there are 33 nations set to join the AIIB as founding members.

As Reuters reports, this geopolitical shift must be noted for its significance:

Historians may record March 2015 as the moment when China’s chequebook diplomacy came of age, giving the world’s number two economy a greater role in shaping global economic governance at the expense of the United States and the international financial institutions it has dominated since World War Two.

But as the March 31 deadline for membership application looms, a certain world power is said to be reconsidering…

The United States.

As The Wall Street Journal (WSJ) reports, the U.S. is proposing that the AIIB work in a partnership with Washington-backed development institutions in a strategic plan to steer the new bank toward economic aims of the world’s leading economies and away from becoming an instrument of Beijing’s foreign policy.

More from the WSJ:

The Obama administration, facing defiance by allies that have signed up to support a new Chinese-led infrastructure fund, is proposing the bank work in a partnership with Washington-backed development institutions such as the World Bank.

The collaborative approach is designed to steer the new bank toward economic aims of the world’s leading economies and away from becoming an instrument of Beijing’s foreign policy. The bank’s potential to promote new alliances and sidestep existing institutions has been one of the Obama administration’s chief concerns as key allies including the U.K., Germany and France lined up in recent days to become founding members of the new Asian Infrastructure Investment Bank.

The Obama administration wants to use existing development banks to co-finance projects with Beijing’s new organization. Indirect support would help the U.S. address another long-standing goal: ensuring the new institution’s standards are designed to prevent unhealthy debt buildups, human-rights abuses and environmental risks. U.S. support could also pave the way for American companies to bid on the new bank’s projects.

“The U.S. would welcome new multilateral institutions that strengthen the international financial architecture,” said Nathan Sheets, U.S. Treasury Under Secretary for International Affairs. “Co-financing projects with existing institutions like the World Bank or the Asian Development Bank will help ensure that high quality, time-tested standards are maintained.”

If you can’t beat ’em, join ’em.  As Zerohedge reports:

So essentially this is just the old “if you can’t beat ‘em, join ‘em” strategy disguised as an attempt to bring the AIIB into the fold of US-dominated multinational institutions. But make no mistake, this is at best an example of Washington cutting its losses and at worst an outright surrender, as no one should pretend that the AIIB, which is starting with $50 billion in capital, will remain subservient to the ADB which, after five decades, has barely three times that amount.

Jump on the bandwagon, or get run over by the bandwagon.  As China’s state-run Xinhua news agency said in an opinion editorial:

For decision-makers in the United States, they really have to be reminded that if they do not jump on the bandwagon of change in time, they will soon be overrun by the bandwagon itself.


5 thoughts on “If You Can’t Beat ‘Em, Join ‘Em: U.S. Seeks Collaboration With China-Led Infrastructure Bank

  1. Let’s face it – Europe is in trouble, the Middle-East is in trouble, Africa has always been in trouble and now South America is in trouble. And now, everyone is running to China for money hoping to solve some of their financial problems. And China and Russia are trying to build financial and military alliances against or should I say as “alternatives” to US sponsored and dominated sources. Well, 100 trillion will always trump 260 billion any day of the week. And it looks like their plan is working just the way they wanted it.


    Posted by Neilto Torneiro | April 4, 2015, 3:12 pm


  1. Pingback: As China-Led AIIB Gains Traction, Premier Li Asks IMF For Yuan Inclusion In SDR Basket | EMerging Equity - March 24, 2015

  2. Pingback: UK And China Deepen Financial Links: London Launches Europe’s First Yuan-Denominated ETF | EMerging Equity - March 26, 2015

  3. Pingback: Russia, Brazil To Join Chinese-Led Asian Infrastructure Bank | EMerging Equity - March 28, 2015

  4. Pingback: China Officially Launches The Asian Infrastructure Investment Bank (AIIB) | EMerging Equity - June 30, 2015

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